Democratic U.S. Senators Elizabeth Warren and Tina Smith have asked the Department of Labor to deny Swiss lender Credit Suisse Group AG a regulatory exemption related to its management of retirement funds as a result of a Justice Department settlement for bribery, according to a letter seen by Reuters on Friday.

The letter from Warren, one of the Senate's most influential lawmakers, will increase scrutiny on the Swiss bank, which is in the middle of a restructuring following a string of high-profile scandals.

The senators sent the letter on Thursday to Ali Khawar, acting assistant secretary at the Employee Benefits Security Administration (ESBA) in the Department of Labor, raising concerns about ESBA's proposal to grant a one-year "qualified professional asset manager" (QPAM) exemption to Credit Suisse.

May Lose 401(k), Pension Plan Oversight

The bank is currently considered to be a QPAM, which gives it the right to manage or transact clients' 401(k) and pension plans. Under EBSA regulations, however, a financial entity is prevented from retaining QPAM status if it has been convicted of criminal activity involving trust management.

The waiver would allow Credit Suisse to continue with business as usual.

Credit Suisse declined to comment, and EBSA did not immediately respond to a request for comment.

It has long been standard practice for regulators to grant companies waivers from business restrictions triggered by misconduct charges provided they agree to a settlement. Democrats say the practice allows companies to continue to re-offend with few consequences.

"We urge you to reconsider and rescind this proposal, which would undermine efforts to hold Credit Suisse accountable for its illegal behavior," the senators wrote.

Defrauded Investors

The letter cited an October 2021 global resolution the bank agreed to, for defrauding U.S. and international investors, and a previous 2014 conviction, as reasons to deny the exemption.

Credit Suisse's European subsidiary pleaded guilty to defrauding investors over an $850 million loan to Mozambique meant to pay for a tuna fishing fleet, and is paying U.S. and British regulators $475 million to settle the case under a deal announced in October.

Credit Suisse is battling problems on multiple fronts. https://www.reuters.com/business/finance/credit-suisse-group-appoints-axel-lehmann-new-chairman-2022-01-16

It lost $5.5 billion when U.S. family office Archegos Capital Management defaulted in March and it was forced to freeze $10 billion of supply chain finance funds in March when British financier Greensill Capital collapsed.

And Chairman Antonio Horta-Osorio exited abruptly last month following an internal probe into his personal conduct.